By Yasmin Mohammad and Tom McDonald

Singapore is forging ahead with plans to approve third party funding of disputes.

Draft legislation aimed at permitting third party funding of international arbitration (including related litigation and mediation), enforcement proceedings and proceedings to stay was published by Singapore’s Ministry of Law on 30 June 2016.

A milestone year

As a leading global centre for international arbitration, Singapore plans to introduce third party funding to allow international businesses to use the funding tools available to them in other jurisdictions.

This is likely to be well-timed for Singapore: 2015 went down in history as a milestone year for international arbitration.

In its latest annual report, the Singapore International Arbitration Centre reported the highest ever number of new cases filed and a new record set for the total sum in dispute:

  • 271 new cases filed (up 22% from 2014);
  • S$6.23 billion total sum in dispute (up 24% from 2014).

Proposed effects
Singapore’s proposed Civil Law (Amendment) Bill 2016 and Civil Law (Third Party Funding) Regulations 2016 is open for public review and feedback until 29 July 2016. Proposed effects of the draft Bill in Singapore are:

  • Putting an end to maintenance and champerty in relation to validly funded disputes;
  • Clarifying that certain dispute resolution third party funding is not contrary to public policy or illegal;
  • Clarifying that a solicitor can recommend and/or facilitate third party funding to a client, providing the solicitor does not receive any direct financial benefit;
  • Prescribing conditions and disqualification measures for third party funders to comply with.

Landmark insolvency decision in 2015
This development follows the landmark 2015 decision of Re Vanguard Energy Pte Ltd [2015] SGHC 156, where for the first time, the Singapore High Court approved a litigation funding arrangement entered into by the liquidators of Vanguard Energy Pte Ltd to enable them to pursue claims for the benefit of Vanguard’s creditors.

Certain directors of Vanguard entered into an agreement with the liquidators to provide them with funding to bring Vanguard’s claims, in exchange for an assignment of a share of any proceeds recovered.

The Court held that the liquidators’ assignment of any proceeds of the claims was within their powers under the Companies Act and that this therefore made the arrangement “immune” from the doctrine of maintenance and champerty.

As a result, third party funding of insolvency claims in Singapore is now a viable option for liquidators looking to pursue valuable claims of insolvent estates within the jurisdiction. The jurisdiction’s desire to continue to respond to the growing use of third party funding across the globe for the benefit of its community, and to be flexible to businesses who choose to arbitrate in Singapore (despite their dispute having no connection to the jurisdiction) is clear.

With a team located in Australasia, Europe and the US, and as a trusted litigation funder working with multinational corporates and top tier law firms, we welcome the opportunities that will inevitably arise from this major development.

Notes to Editors:

For more information on Vannin Capital, please contact: Meika Aysal, Marketing at Vannin Capital, T: +44 207 099 5180, E: ma@vannin.com